Purpose of Accounting

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TASK 1 Purpose of Accounting In the modern day it is important for any business to have a good knowledge of different accounting process and help to understand how the business operates. Anyone from potential investors to stakeholders could look to see how well the business is going. We all know that any kind of idea could fail if their owners doesn't very carefully manage the business accounts. Purpose of accounting include recording different financial transaction ,planned or actual and with this figure producing final information.There are a plenty of different reason why accounting is so important to the progres of the business Record transaction-It is very important for any business,all the money coming in or out of…show more content…
TASK 2 Capital income: This is a money which has been invested by owner or investor,and they are used used for setting up a new business or buying any kind of mid-long term equipment.Primary buying of stock can be made using capital income ,but for future any stock could be buying using the sale income.There are so many different sources of capital income and there are all available to a different type of business Sources of capital income: >Sole trader-income from his own capital or any kind of personal bank loan. >Partnership- All partners are liable for increasing capital income,if they have any loans they will be individually secure. >Shares-Normally they are registered with companies house and shares are published. >Loans-lent to the owners or business. >Mortgage- large amount of money for a long period of time(repayment),and its insure with the premises. Revenue income: This is the money generated from the daily operation (sales of service and and good) and depends on the different type of business.We have three general type of sources. >Sales-cash or credit. >Commission- from selling products or service as an agent. Capital Expenditure: This is a money used to buying capital items,they are asset and belonging to the owners or the business.The
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